How you can make your offer stand out in Sacramento’s ultra competitive housing market

Even with rising interest rates, Sacramento’s housing market is among the nation’s most competitive.

So how do you make your offer stand out?

“Cash is king,” says Sacramento real estate agent Michael Rehm.

That is, hundreds of thousands of dollars to make an all-cash offer.

Rehm said all-cash offers have become more frequent Bay Area residents, he says, have changed the dynamic.

“A lot of these buyers from the Bay, they’ve owned their house for a long time,” said Rehm. “They are able to sell their house for $2 to $3 million. They have $600,000 for an all-cash deal in more affordable Sacramento.”

The advantage of an all-cash deal for the home seller is a quick closing, sealing the deal within weeks.

The average escrow process to close on a house can take 30 to 40 days or more, says real estate agent Ryan Chatlaong of Re/Max Gold in Rocklin. An all-cash deal can cut that period by half or more.

How can you compete with all-cash?

For most buyers, though, an all-cash deal is unrealistic. But there are other levers buyers can pull to stay competitive.

The most obvious: Offer more than the asking price. The more a seller can take home from the sale, the more tempting the offer — even if they have to go through a more lengthy escrow process.

That comes with its own risk to buyers. Not only will they need to be approved to borrow more money and be willing to pay a higher monthly mortgage, they also run the risk of paying more than the appraised value of the home.

Speed things up by removing contingencies

Another technique, Chatalong says, is removing contingencies that could delay the closing process.

What is a contingency? An offer to purchase a home is typically made contingent on several criteria — conditions that must be met in order for the sale to go through. They make deals more complicated, and more time-consuming. Common contingencies for the buyer include a home appraisal and inspection. A buyer could choose to speed up the process by waiving these protections, but that comes with risk.

If buyers are borrowing money to purchase the home, their lender will require an appraisal. Removing an appraisal contingency means that buyers agree to buy the house at the agreed-upon sales price, even if the appraised value comes in lower than that.

With an appraisal contingency, the buyer would be able to walk away from the sale of the house. If the buyer waives that contingency, Chatalong explained, the buyer needs to come up with cash to make up the difference between the agreed-upon sales prices and the appraised value.

With a home inspection contingency, buyers can ask the homeowner to fix or pay for any structural or mechanical issues that are found. The two sides negotiate until a deal is reached; otherwise, the buyer can walk away from the sale of the house. If buyers waive that contingency, they agree to buy the house as-is.

“Typically, I highly recommend doing the inspection,” Chatalong said. The risks of serious problems turning up during the inspection process are too great.

But there’s another option: Chatalong said the inspection could be done sooner rather than later, meaning the buyer could commit to the seller that the inspection will be done within a week of signing a house purchase contract.

When speed isn’t the deciding factor

Luckily, not every home seller is in a hurry to close, says Sacramento real estate agent Rachel Lee of Dunnigan Realtors in Sacramento.

She said sellers may need a few months for their own move and many not want the closing speed typically found in an all-cash deal.

The key, she said, is to understand the concerns of the sellers.

“Everyone is a human being with their own unique needs,” she said.